Stock XYZ currently sells for $40.00 per share, has an expected dividend of $4.00 per share and its expected

dividend growth rate is 2% per year. If investor's required rate of return for this stock is 10%, then from the

perspective of this investor this stock is:

A) overpriced and offers an expected return lower than the required return

B) underpriced and offers an expected return higher than the required return

C) underpriced and offers an expected return lower than the required return

D) overpriced and offers an expected return higher than the required return